While most are hoping that the U.S. can transition to electric vehicles and vehicles running on sustainable biofuels, this last year has made it clear that the process will be no walk in the park. Recent studies showed that, in their current form, hydrogen cars emit more carbon over their lifecycle than gas cars. And early consumer electric vehicles, like the BMW Mini E, while low emissions, have suffered from a variety of temperature related woes.

Now the biofuels sector has become the latest green transportation field to suffer disappointment in 2009. The year started off rocky with the European Union in March unveiling import-killing tariffs on biodiesel and other biofuel. Then, as the U.S. recovered from the recession, diesel prices dropped 18 percent off their highs, making it harder to justify the high costs of biodiesel.

Now another nail has been placed in the commercial biofuel industry' coffin -- the government $1/gallon federal tax credit will expire this Friday. And for many businesses in the industry, it may be the last; amid a frustrating market, many biodiesel makers across the U.S. say they will likely call it quits and cease production when the credit ends.

The largest biodiesel refinery, located in Houston, Tex. has already shut down. Another large refinery, located in Hoquiam, Wash. has been shut down as well, following a December explosion.

However, it's not just big businesses that are cutting biofuel production and jobs. Small businesses are also suffering. Dwight Francis of Valliant, Okla. launched a new biodiesel venture earlier this year when the local timber economy tanked. He was producing 12,000 gallons of biodiesel fuel per week by mid-year, and his business was viable, thanks to the $1/gallon tax credit. Now with the credit gone, he says he's shutting down the promising startup.

He bemoans, "By the time you buy the feedstock and the chemicals to produce the fuel, you have more money in it than you get for the fuel without the tax credit. We won't be producing any without the tax credit."

Congress and the U.S. Environmental Protections Agency have set the ambitious benchmark of producing 36 billion gallons of home-grown biofuel a year by 2022, reducing dependence on volatile foreign oil. The prospects of achieving that goal now look bleak, according to government officials. States Robert McCormick, principal engineer at the Department of Energy's National Renewable Energy Laboratory, "You could say the entire biofuels industry has had a rough year."

Despite these setbacks both optimism and debate on biofuels remains high. Many liken the departure from traditional gas combustion to EVs, fuel cell vehicles, and biofuel vehicles to be similar to other past modern technological breakthroughs such as the computer, internet, airplane, and railroad. These past innovations only reached consumers thanks to massive subsidies and investment of both money and land from the U.S. federal government. Many argue that similar investments are needed to allow the alternative energy transportation industry to reach viability. The real question, many say, is which candidate(s) is/are best to invest in (EVs, fuel cells, and/or biofuels) and when and how much should be invested.

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I believe they say "necessity is the mother of invention". That being the case, perhaps the increased leaning towards EV's will lead to innovative battery technologies. Which of course would also filter down to every other device that runs on batteries.

Don't get me wrong, I don't think there's anything wrong with green subsidies-- to a point. It's a matter of balance between allowing for interim solutions while not veering off course for a more permanent solution. The same goes for solar and wind-- until we have a viable fusion option.

There are tons of things wrong with Green or any other kind of subsidy. The distort the market and create demand for items that are not needed nor practical.

While I'm not for this tax credit it made ALLOT more sense then Ethanol subsidies or even subsidies for Electric cars, since the first is more damaging to the environment then bio-diesel and the the latter doesn't while some studies show is as bad lacks the infrastructure and technology to work at this time.

Bio-diesel was a really the only practical way at this time of lessening our dependence on oil based vehicles if you truly believe that is needed at this time.

Plus our Government and it's leaders are not going to support something that you can grow and create on your own since that would mean they have less means of taxing and control you. Which is something that bio-diesel provides.

quote: No cause I don't have to pay for Marketing, unless I choose to buy a product.

So, you don't really care about market distortion unless you have to pay for it?

I understand the aversion to helping pay for a technology to be viable, against your will. But, if you were truly opposed to market distortion, you would recognize that marketing, collusion, branding, etc. can be as bad as (or worse than) subsidies at creating market distortion.

So which is it? You don't like market distortion or you just don't want to pay the taxes? I mean, I understand both, but don't pretend to be so concerned about the "market" when all you care about is being taxed.

Marketing exists in the same feedback loop as regular sales. If your product sucks, you can have the best marketing and it will still tank in the market.

Political subsidies exist outside this feedback loop. The product can suck, and politicians can keep approving the subsidy because they're enamored by the product or refuse to see the evidence that it sucks.

The difference is that if I get suckered into purchasing a crappy product... *I* got suckered into it. For the salesperson to come to me, tell me to give them money, and here, take this, is a completely different story, and that's what tax + subsidy equals.

Are you seriously arguing that non-earners, on average, spend money more wisely than earners? That is beyond moronic. It's as simple as looking at which party has a bigger fear of loss when making a purchase. Not only that, politicians and GSEs market themselves all the time. I live in Iowa and I hear marketing ads on the radio from ethanol collectives, and I'm pretty sure they wouldn't exist to market themselves without subsidies.

quote: you would recognize that marketing, collusion, branding, etc. can be as bad as (or worse than) subsidies at creating market distortion.

Of all the random things to get upset about..

On the other hand, without some degree of marketing, how would you, for example, be alerted to the existence of a new product? Studiously walking every isle in every store in a shopping mall/strip mall looking for new items? Visiting a website to find what movies are playing -- but names only, because trailers are marketing in themselves?

Wish I had less things to worry about such that I could get on the internets and go off about marketing. :P

I'm not against marketing. I was just saying, market purists are one thing: people who hate taxes are another.

In a perfect capitalist world, the market would select the best choice for a product (combination of quality, price, availability, efficiency, etc.).

The poster I replied to implied that subsidies are bad because they distort the market, but then basically accepted market distortion as ok, as long as his taxes don't get raised. He cares less about the principle than his tax rate. The principle is just an excuse, which will likely be discarded as soon as it's convenient.

Bio-diesel is simply too expensive. A government subsidy doesn't make it cheaper. Who do you think pays the subsidy? It's a pyramid scheme. It makes the bio-diesel competitive (sort of) so long as only a few use it and the subsidy is paid by the vast majority that do not. Scale it up so that the majority of people use bio-diesel, then guess what? Everybody pays the subsidy and it costs the same as if there were no subsidy to begin with.

Perhaps if the price of petroleum diesel goes up enough bio-diesel will become competitive. If so, people will start companies again to produce it. Not a problem. As stated in the article, it only takes a few months to get bio-diesel production up to speed. It doesn't really deserve to be subsidized.

How much tax is on a gallon of gas? I pay 27.1 cents in Minnesota on top of the 18.4 cents Federal. So 45 cents total. At what point will you be satisfied to stop taking money? Why is it I only hear people ask how we get more money, not how to control spending. Biodiesel is not necessary. We have plenty of oil in this country if people would quit whining about it and start using it. Simply put, "green" technology is not mature enough to actually use. Where will I plug my electric car in at work? If I live some where the temp doesn't kill the battery in the first place. 60 miles on a charge and 3 hrs to charge? How is that realistic? I am not using a computer thats 1k because 20 years ago it was 5K, it's because the cost to produce that computer has dropped due to changes in manufacturing and technology. It's a great idea to start looking green, but realistically the technology is in it's infancy and is not currently scalable. Or does stupid things like use our food supply as an energy source.

So keep looking for your tax increase. ANd while you are at it, do a little research and understand how much money you pay now in taxes. I don't understand why people are always so quick to say tax more so we can spend more. Yes if it makes sense, but when a product costs more to produce then it does to consume, that's just bad economics. I'll give you a quarter for every dollar you give me and we'll see how long till your broke.

It isn't about "taking money". There should be a floor on gas prices to provide stability for other start up alternatives like electric and others. It would also promote conservation and innovation in high mileage cars. When gasoline prices hit $8 per gallon we as a nation are going to be in extreme pain. Shouldn't the USA be preparing for that now? Other nations like Japan and Germany have had these in place for decades, and as a result, have much higher fuel economy averages than we do (I think Japan is double mpg on average than the US). It has also spurned innovation. Is it any wonder that the best and best selling hybrids are coming out of Japan? Is it any wonder that the best diesel vehicles come out of Germany? Is it any wonder that the only US car company to survive the collapse last year was Ford who didn't put all of its eggs in the SUV basket ( by basically realizing gas prices could get very high very quickly)?

And the taxes you pay on petroleum product is nothing compared to the market subsidies of an artificially strong dollar, CIA funded revolutions, wars in a part of the world that was just flat desert that noone wanted until oil spurted up...if you think oil itself is not subject to government subsidies than I think you have blinders on.

I'm originally from Brazil, so don't talk to me about taxes, because you have no idea what it is to pay taxes in order of 50% or more of the price of pretty much anything.

You can dream as much as you want about trying to control spending, but there are two factors that make that almost impossible: We're dealing with humans, and most of those who are responsible for spending do so in areas where they are not experts. This won't change for at least a few generations more, and only if we revamp our education system.

quote: I am not using a computer thats 1k because 20 years ago it was 5K, it's because the cost to produce that computer has dropped due to changes in manufacturing and technology.

Duh, that was partially the point of the comment. The other half is that if people didn't buy those 5k computer the industry wouldn't have survived long enough to be able to produce today's computers at these prices.

quote: It's a great idea to start looking green, but realistically the technology is in it's infancy and is not currently scalable.

And that's why somebody has to invest in it. Other governments are investing in it. Why can't we?

And we have to be happy for those who have the vision (and the money) to buy these "pieces of crap," just as we should thank the ones who bought those 5k computers. But instead all you hear is people whining and making fun of them.

Biodeisel's subsidies are not even a drop in the bucket compared to the subsidies given to the oil industry. In a free market, we'd be paying about $6 per gallon for gasoline. Suddenly biodeisel would make sense. This will never, ever happen in the U.S.

Think gas/oil subsidies is like $10 bil a year. President Obama wants to cut that in half, which your big oil (and the politicians getting paid) are screaming foul.

Most ppl think it's stupid as it'll increase gas costs, energy costs, etc. I think it's a great idea personally. Make ppl more conservative in their gas and energy usage. Maybe I can see less single person in a full size SUV driving around.

That would be great if they will give the money cut from the subsidies back to the tax payers so we can use it to pay for the higher price gasoline ourselves. But you and I both know that they will just use it somewhere else and we will be left paying the same taxes and more for our fuel.

The market usually works, but not always. It isn't going to work in this case. It will take 20 or more years to convert a gasoline based transport infrastructure to something else. But gas prices will become intolerably high well before that. It makes sense for the gov't to use subsidies to encourage these fledgling industries so they can more quickly achieve economies of scale so we don't end up with a lag between not having enough gasoline and having something else.

However, on the specific case of biodiesel, it's probably a good idea to let it die. THe world currently uses six times more oil calories than the amount of calories grown from food worldwide. Meaning that even if all the food on earth were converted to fuel that we'd only have 15% of what we need. It's simply impossible to grow enough fuel to satisfy demand, barring some kind of exponential increase in the amount of fuel per acre. I fully support the research, but as an industry it currently cannot be scaled to cover even a reasonable fraction of what is needed.

Battery research is already a fore front technology. Who doesn't have an electronic device in their pocket that they wish would last longer?

There is no need to dump public money in it.

People assume that if the .gov puts money into a program it will come true. If people knew how much money put into these programs went no where, they wouldn't be so hot to scream for .gov intervention all the time.

That's the case with *all* new research. And there is good reason for the government to put money into research, in one way or another. The market isn't an all-knowing, benevolent god. The reality is, most new technology had its genesis in publicly funded research.

quote: And there is good reason for the government to put money into research

Key word there is research. Tax funding of research is fine by me, but subsidizing immature tech because it fits a political agenda is not OK. Continue to research and perfect it, fine, then bring it to market when it can compete on it's own.

The goal, though, is to marriage the benefits of the market with funding for research (ie, the market, provided subsidies, will work to develop a tech not is not yet financially viable). I think the real problem is in funding specific technology (eg Corn ethanol), as this largely abates the benefit of the market--that the problem will be attacked by many minds, and failures will be weeded out by market failure.

We can vote the politicians out. Rich people give their money to their stupid, indolent kids, who then weigh on the true middle class. I think we should show everybody "Keeping up the the Kardassians(sp--like I care)" who thinks that we live in a meritocracy...

The real problem is that the entire fuel, battery and automotive industry has shut down and bought out most of the patents for magnet based motors/engines that have proven to work very well to power up to a normal "full size" consumer truck (without towing or heavy loads). There has already been proven magnetic motors powering cars since the 60s, yet they get shut down and silenced by big oil and automakers.

I know a local retired guy that lives by my brother in law in a small town in FL that bought a 1990 Geo Metro and made a magnet motor... if I was not 6'5" and could fit, I would have taken a ride. But I saw under the hood and there is no question that there is no external power source, and it still has the alternator and battery for 12V stuff like radio and lights and the usual stuff. Just no need for sensors, emissions or the extra computer related/controlled stuff (he took out the lights in the dash for those items).

As carbon-based life-forms, we should pay a carbon tax. Exhaling CO2 should be taxed. Your carbon-releasing decaying body should be taxed. Life itself should be taxed. Carbon is the worst evil we have ever faced. We have to act now, no matter the cost. We need to stop greedy Big Oil before they melt all the ice caps, drown the polar bears, and destroy our coastal cities. The only answer is to print more money hand over fist, to spend our way out with less efficient technology. It's time to level the playing field. The time for talk is over. No more politics as usual. Change is here.

I am just going to assume that you only have a fifth grade education after reading that posting. Otherwise you would know that CO2 sources that originate from atmospheric CO2 are not related to the problem. All that carbon that is in you and in your food was pulled out of the air by a plant some time in the recent past. That is called the carbon cycle and almost all life on earth depends on it. The problem is the release of sequestered carbon (in the form of fossil fuels) which tip the balance in the carbon cycle. That is why atmospheric CO2 is way up and the oceans are becoming more acidic. Whether that is a problem we should worry about is up to our elected officials.

quote: All that carbon that is in you and in your food was pulled out of the air by a plant some time in the recent past. That is called the carbon cycle...

All that carbon that's released when we drive our ICE cards or burn coal to generate electricity was pulled out of the air by a plant some time in the distant past. If I'm not mistaken, carbon levels used to be many times what they are today, long before humans were ever around. We're not coming up with 'new' carbon these days...

quote: Whether that is a problem we should worry about is up to our elected officials.

NO!@!!!!! Absoflippin'lutely not. You people just don't get it. We worry about it and tell the GD politians what to do about it, no the other way round. This is classis sheep stuff.... lead me, guide me, tell me what color undies to wear.

Agreed. Biodiesel makes a lot more sense than electric does, at the very least at this point in time anyway. The government is picking EV over biodiesel for us by continuing tax credits for one but eliminating incentives for the other.

Cutting off the biodiesel industry while propping up the EV industry is, at best, a highly dubious action.

How many dollars have been collected for the electric incentive, and how many dollars actually collected for the biodiesel one? :-)

I think the biodiesel credit is something that industry revolves around. I think the EV one helps some, but probably makes comparatively little difference in the product being made -- mostly just makes more be sold (as opposed to the 100%/0% sales sort of difference with bio-fuel).

The volt would still sell w/o any incentive at all. The biodiesel would probably sell pretty close to none at all w/o the incentive.

You can have both! It acutally makes sense to use biomass fuels to generate electricity in efficent turbines and charge our electric vehicles with this energy. This is the best way of utilising the most energy from biomass.

So yes, support biofuels where it makes sense, and support the EV industry also.

This is a poor comment. This paints Al Gore as an environmental zealot, when in reality he is generally a supporter of biomass sourced energy. Please read up on the issue before posting an ill-informed comment that does nothing to help this discussion.